Steve Olson
• 5 min
Ep 003 - Are smaller teams more profitable than larger?
Steve's Private Podcast
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Welcome to episode three. This will be a quick one. I got an email. Actually, I got two emails this weekend from different agents, lead unrelated, different brokerages, different markets talking about teams in 2025 and their growth trajectory.
But those of you guys that know me personally, you know that from a coaching experience, there's really two things that I coach to operations and process excellence and that team growth.
And more importantly, how do you grow a team the right way so that doesn't become unprofitable and lose money, all that fun stuff. that I've learned in 13 to 14 years
And I'll tell you one thing of coaching teams. This profitability has nothing to do with the size of the team. There's an assumption out there that big teams make less money and there's an assumption out there that small teams make more money.
And I have news to tell you. Small teams can give you a ton of examples of small teams that don't make any money. And I can give you a ton of examples of big teams that don't make any money.
And the same is true on the opposite side. I can give you some examples of some four person teams that make six to ten million dollars a year. And I can give you some examples of some 300 person teams that just make money like nobody's business.
So you might be asking like, OK, well, small teams, big teams that make money, they don't make money. What's the point of this whole thing? The wealth in growing a team, or if you take the word team out of the equation and use the word leverage, the wealth and leverage and growing a real estate team has nothing to do with the size that it has to do with how it's set up and more importantly, how it's operated.
If you run a team and you don't have a whole lot of oversight and you could lower the commission splits and there's not a whole lot of delivery that you have to do on that team from a person to person, maybe it's more of a great type effort or maybe it's a cohort effort or like our team, there's a lot of pods that are in there with growth directors.
Then it could be wildly profitable the bigger you grow. If it is a lot of handholding and all the lead generation is up to you and let's say that you have like no split from a personal business, but all the split is on a lead gen and you suck at lead gen, then probably that team is not going to be very profitable.
So if you're thinking about growing a team in 2025, a couple of things that I would tell you right now, number one, how you set it up will be the how you profit, right?
Just that simple. If it's easy, if it's simple, then it will scale. If it's complex, if there's 19 different splits, if there's all these different types of fees, if there's new agents and experienced agents, then it's really, really, really hard to scale.
You also need to remember that the average per agent productivity in the United States taking out the bottom 50 percent and actually after this podcast
I'll put this in the show notes below if I can find the exact number. I think it's like 3.9 or something like that, pre pre. Or don't quote me on that.
I will look to see what that exact number is. But for you to have this expectation to bring on a team member and a team member is going to come on and every single one of them
25 to 30 homes a year. is going to want to sell It's just not the right expectation because the majority of the market doesn't have a need to sell
25 to 30 homes per year. And even look at some of the biggest those that have 100 to 500 agents. teams in the country, If you look at the per agent productivity, I would venture to guess it's probably somewhere around six homes a year higher than the national average, but not a whole bunch of, you know, it's not 150 agents selling 35 homes a year.
If you could build a team of 150 agents selling 35 homes a year, then I think you'd see a complete different shift in how Zillow would have their business model.
But most of the people in the market don't need to sell as many homes entrepreneurial agents need to sell. that maybe some of the So, number one, the success of the team, the profitability of the team is solely rely on how you set the team up from a financial standpoint.
Is it simple? Is it consistent? And can you onboard agents to the same platform over and over and over without bleeding resources? That will be number one.
If you want to stay small, like if I only wanted to do something on my own, Shelly assistants, a marketing director, I'd probably have two somebody in charge of running ads, a full time content creator, and maybe an ISA to set appointments for me.
Those five people, by the way, none of which would be on a commission split with the exception and even they would be at a low commission split.
That would be easy for me to grow a three to seven million dollar a year business will really because of our average sales price. So you don't need a team of 20 to make millions of dollars a year
However, you want to make in real estate. millions of dollars a year and you want a big team. It's wildly possible. It's very easy. However, you need to focus on making sure that you set it up the right way.
Eminence scales, right? If it works with five agents, maybe it'll work with 10. If it works at 10, but doesn't work at 20, you set it up wrong.
Right. So I would think about that. Let me know. Any questions? Shoot me a comment below. Send me an email. I'd love to help. 100% do work in 2025.
It's just all the same, right? Maybe another podcast or walk you through it. You'll set up the scales high number. at a very high number, All right.
We'll see. That's your Monday or Tuesday, depending on when this drops. And I'll see you on the next one.
